It's free for the first year, expect them to charge a monthly fee for updates after that.
No, it's free to upgrade if you do so within the first 12 months, but if you're too slow out of the blocks you will have to pay (although that might be relaxed).
They will NOT charge a monthly fee once the 12 months are up - all future updates will be free also: MS will make their money instead from enterprise licences (who are exempt from the free upgrade), Office subscriptions and other cloud/infrastructure services.